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The Case for State Intervention

By Madhura Swaminathan

In India, the problems of chronic hunger and malnutrition persist on a massive scale. The prevalence of malnutrition is one of the highest in the world, higher than in some very poor countries of sub-Saharan Africa. According to the 2007 Progress for Children Statistical Review by the United Nations Children's Fund,1 the proportion of underweight children below the age of five -- an indication of malnutrition -- was 28 per cent in sub-Saharan Africa and 42 per cent in South Asia (43 per cent in India). The Report on State of Food Insecurity in the World 2006,2 by the Food and Agriculture Organization of the United Nations, confirms that no country comes close to India in terms of the sheer number of people living in chronic hunger.*

According to findings from the 2005/06 National Family Health Survey,3 45.9 per cent of children below the age of three were underweight or malnourished in terms of the standard weight-for-age criterion. The corresponding proportion in 1998/99 was 46.7 per cent. Over the last seven years, any change in this key indicator of child malnutrition has been negligible. Furthermore, the prevalence of anaemia (reduced oxygen-carrying capacity of red blood cells) has increased from 52 per cent in 1998/99 to 56 per cent in 2005/06 among women aged 15 to 49, a condition that affects 58 per cent of pregnant women. Anaemia has also risen among children aged 6 to 36 months: 74 per cent were anaemic in 1998/99 and 79 per cent in 2005/06. Data from the National Nutrition Monitoring Bureau indicated that 48.5 per cent of adults had a body mass index below the norm in 1993/94. These indicators suggest that approximately one half of the Indian population is malnourished today. The rate of decline in the absolute number of malnourished persons has been very slow, slower than the rate agreed upon at the 1996 World Food Summit in Rome. India has fallen short of meeting the Millennium Development Goals targets it set for itself.

These findings are a reflection not only of India's present, but also its future. The failure of national policy in this regard affects this generation -- as malnourished children are unlikely to reach their full human potential -- as well as the next generation, since anaemic and malnourished young girls are more likely to become mothers who will in turn give birth to underweight babies.

By the end of July 2008, the situation has probably worsened, given the rapid increase in prices of basic food items. The overall inflation rate is now at a 13-month high, close to 12 per cent, but price increases for certain food items, including rice, certain pulses, vegetables, fruits, tea and edible oils, have been even higher. In New Delhi, for example, retail prices rose 20 per cent for rice, 20 per cent for groundnut oil, 21 per cent for mustard oil and 10.5 per cent for yellow lentils between May 2007/08. According to a study by the National Sample Survey Organization, a central government body, the current high food and fuel prices are likely to push 5 per cent of the Indian population to the brink of starvation.4

This paper deals with the major policy interventions in India aimed at enhancing food security. My focus is on policies that concern final consumers at the household and individual levels, and not those dealing with producers. The biggest food-based intervention in India is the system of public distribution of food, a programme that aims to provide access to cheap food for households throughout the country. Two other major programmes with a food component are the Midday Meal, which provides noon meals to children in primary schools, and the Integrated Child Development Scheme or ICDS, which provides supplementary nutrition to young children and pregnant and nursing mothers. In 2006/07, some 31.6 million tonnes of food grain (rice and wheat) were provided through the public distribution system (PDS), and all other food-based welfare schemes received 5.1 million tonnes.5, 6

Policies of food security: Dealing with famines versus chronic hungerIn their path-breaking book, Hunger and Public Action, and the accompanying volumes of the World Institute for Development Economics Research of the United Nations University series, Jean Drèze and Amartya Sen make a clear distinction between "the problem of chronic hunger (involving sustained nutritional deprivation on a persistent basis) and that of famine (involving acute starvation and a sharp increase in mortality)".7 Through case studies of several countries, the book discusses the differences in strategies and policies required to deal with the two sets of problems.8 In the case of India, there is plenty of evidence, starting from the colonial period, on the nature of government interventions during famines, the last of which -- the Great Bengal famine occurring under colonial rule in 1943 -- resulted in an estimated 3 million deaths.9 Drèze and Sen argue convincingly that post-independence India has dealt effectively with periods of food shortages, droughts and other food crises in a way that prevents a famine situation. However, I contend that the country has failed to ensure adequate access to food for all its people.

India's public food distribution systemThe Public Distribution System (PDS) in India is a food-rationing mechanism that entitles households to specified quantities of selected commodities at government subsidized prices. A network of fair-price shops sells the commodities. In most parts of the country, up to 1997, the PDS was universal, and all rural and urban households with a registered residential address were entitled to rations. Eligible households were given a ration card that entitled them to buy fixed rations of selected commodities. The exact entitlement (quantity, range of commodities and prices) varies across India. In 2006, there were almost half a million fair-price shops in the country. Private agents and cooperatives ran these shops and a few were State-owned. There were a total of 222.2 million families with ration cards in India and on average one fair-price shop served 454 ration cards.

Public distribution was first started in 1939 as a wartime rationing measure. The British Government introduced it in Bombay and later extended it to six other cities and a few other regions. The drought and food shortages of the mid-sixties highlighted the need for strengthening and continuing with a system of food distribution, and the PDS was made a universal scheme in the 1970s. Thus, from its inception as a rationing scheme in big cities during the Second World War, the PDS was converted into a universal programme for the provision of cheap food and became a component of the strategy to reduce poverty.

Historically, the objectives of the food distribution system10 have been to maintain price stability, increase the welfare facilities for the poor by providing access to basic foods at reasonable prices, food rationing during situations of scarcity, and keep a check on private trade11 for fear of speculators and black marketeers. It is clear that some of these objectives are less important today than in the past. While rationing is not very relevant today, maintaining price stability is crucial in the post-liberalization period (1990s and more so the 2000s), when private traders have been given a freer hand and international price fluctuations can more easily affect domestic prices. In the context of widespread malnutrition and inflation in food prices, access to basic food at reasonable prices remains an important policy intervention.

There have been four phases, broadly speaking, in the history of the public distribution system in India.11 The first was from its origin to 1960, a period when the system was expanded to other cities, during which time distribution through the PDS was generally dependent on imports of food grain. The second phase, from 1960/78, was one that saw major organizational changes. Specifically, in response to the food crisis of the mid-1960s, the government took a holistic approach to food security and set up the Agricultural Prices Commission and the Food Corporation of India (FCI) in order to strengthen domestic procurement and storage. The third phase, from 1978/91, was marked by large-scale expansion of the PDS, supported by domestic procurement and stocks. The fourth, from 1991 to the present, is one in which the policy of universal PDS has been replaced by a targeted policy in line with the objectives of economic liberalization. Thus, over the entire period, the PDS grew from a rationing scheme in selected cities to a national universal programme of food distribution and then to a policy targeted at the poor.

Impact of the Targeted Public Distribution SystemIn 1997, following the advice given in an influential World Bank document,12 the Government of India introduced the Targeted PDS (TPDS) in order to curtail the food subsidy.13 The policy targeted households based on an income criterion to demarcate "poor" and "non-poor" households. TPDS differs from earlier variants of the public distribution system in certain key respects.Targeting: The most distinctive feature of TPDS in relation to previous policy in India is the introduction of targeting, specifically the division of the entire population into below-poverty-line and above-poverty-line categories, as determined by the Planning Commission of India, a central government think-tank. The two groups are treated differently in terms of quantities and prices. With this, the government initiated a policy of narrow targeting of households living on incomes below the official poverty line.

Dual (multiple) prices: The second distinguishing feature is that the PDS now has dual prices for below-poverty-line and above-poverty-line consumers. A third price, introduced in 2001, is for beneficiaries of the Antyodaya scheme -- for the "poorest of the poor" -- in which food grain is distributed with an additional subsidy. In March 2000, the government announced a major policy change. The prices at which FCI sells PDS grain to states will be set at half the "economic cost" incurred by FCI for the below-poverty-line households, and at the full "economic cost" for the above-poverty-line households.14 In short, there was to be no subsidy for above-poverty-line households.

Centre-state control: A third important feature of TPDS is that it has changed the responsibilities of the central and state governments with respect to entitlements and allocations to the PDS. The system is designed and managed by the state governments, which differ from each other with respect to food entitlements, the commodities offered, and the retail price set by them. In the past, the state governments demanded a certain allocation from the central pool and, based on certain factors, most importantly past utilization and the requirements of statutory rationing, the central government allocated grain and other commodities to states for their public distribution systems. With TPDS, however, the size of the below-poverty-line population and its entitlements are decided by the central government, while the allocations for the above-poverty-line population, or additional allocations for both, are decided somewhat arbitrarily based on past utilization and demands from the states.

It is clear that the TTPDS has not been effective in ensuring food security to the needy. According to a 2005 performance evaluation by the Planning Commission of India,15 "The transition from universal PDS to TPDS has neither benefited the poor, nor helped reduce budgetary food subsidies." The most relevant problems with TPDS are that targeting has led to the large-scale exclusion of genuinely needy persons from the PDS network; targeting has adversely affected the functioning and economic viability of the PDS network and led to a collapse of the delivery system; TPDS has failed to achieve the objective of price stabilization through transfer of cereals from surplus to deficit regions of the country; and lastly, there are reports of grain being diverted and not reaching the final consumer.

Exclusion and targeting errors: One of the arguments made by proponents of TPDS is that the scheme will be able to reach the poor or needy more effectively than the universal PDS. There are two types of errors that occur in any targeted welfare programme due to imperfect measurement: Errors of wrong exclusion (Type I) which refer to the exclusion of genuinely poor or deserving households from a programme; and errors of wrong inclusion (Type II) which refer to the inclusion of non-eligible persons or households in a programme.

Any discussion of the merits or demerits of targeting has to recognize that there is a trade-off between these two types of error. Universal programmes are likely to have low errors of exclusion but high errors of inclusion. On the other hand, a programme targeted at a specific group is likely to have a low error of wrong inclusion but may lead to a high error of exclusion. When one type of error decreases, the other one increases, and so we should attach weights to both. Proponents of orthodox economic reform have implicitly attached a zero weight to errors of inclusion and are thus concerned only with minimizing errors of exclusion. This implicit valuation should be recognized openly and debated, as a strong case can be made for a weighting system that reverses the weights attached to the two types of errors and places higher weights on errors of exclusion than on those of inclusion.16

Any decision on targeting, therefore, calls for the exercise of some judgment about the relative weights to be assigned to these two types of errors, and in doing so it could be noted that there is a basic asymmetry in the costs attached to the two types. Errors of wrong inclusion result in fiscal or financial cost, that is, higher expenditure due to the inclusion of ineligible beneficiaries. Errors of wrong exclusion, however, lead to welfare costs, that is, costs to individuals and society due to the inadequacy of food, malnutrition, ill health, etc. While fiscal costs are known and easy to measure, it is more difficult to assess the welfare costs of under-nutrition, although they are likely to be high with inter-generational negative impact. Further, the relative size of the two types of errors will depend on the size of the target group. As the studies I mentioned earlier indicate, the number of malnourished persons in India is very high. The relevant issue, therefore, is the size of the error of wrong exclusion in the Targeted PDS and its welfare implications. Recently released data from the 61st round of the National Sample Survey, in a report titled Public Distribution System and Other Sources of Household Consumption 2004-2005,17 shows that targeting, in rural India, has led to high rates of exclusion of the needy households from the food distribution system and a clear deterioration of coverage in states such as Kerala, where universal PDS was most effective.

The first stage of exclusion is of households that do not possess a ration card. Households fall into four categories: Antyodaya card holders; below-poverty-line card holders; "other card" holders (mainly for above-poverty-line households); and those without cards. Excluding the states of the Northeast (where there are some serious problems of data quality) the proportion of households with no card was highest in the eastern state of Orissa, where 33 per cent of rural households did not possess any type of ration card. Thus, in Orissa, characterized as "severely food insecure", one third of rural households were outside the purview of the PDS.18 In another ten states, more than 20 per cent of the rural households did not possess a ration card. Tamil Nadu, in the south, is a special case, as it is the only state with universal PDS.

From March 2000 onwards, grain prices for above-poverty-line cardholders were increased, and the gap between below-poverty-line and above-poverty-line prices widened. In many states, above-poverty-line prices of grain were similar to market prices and, as a result, households with above-poverty-line cards stopped participating in the PDS and so, in effective terms, were excluded from the PDS. This was reflected immediately in above-poverty-line offtake. With a few exceptions, the majority of households were reported in possession of an above-poverty-line card in 19 states, including: 60 per cent of households in Bihar, 57 per cent in Kerala, 63 per cent in Assam, 65 per cent in Uttar Pradesh, and 78 per cent in Rajasthan.

In the overwhelming majority of states, 60 per cent or more of the population was effectively excluded from the PDS. This includes the states of Bihar, Madhya Pradesh, Rajasthan and Uttar Pradesh -- considered relatively backward both in terms of income and industrialization and also human development indicators -- as well as other states like Kerala, which was a model for the rest of the country before the Targeted PDS was introduced. The exceptions were Andhra Pradesh and Karnataka where a simple majority of rural households possessed below-poverty-line or Antyodaya cards. It is important to understand the implication of this large-scale exclusion of households from the PDS. The National Sample Survey report provides us with data on possession of cards by occupational type of household, social group, land ownership and expenditure level. From these data, it is possible to identify the characteristics of households that are excluded from the PDS.

First, let us consider households of agricultural labourers, since manual labour households are undoubtedly among those most in need of access to the PDS.19 The results were striking. There were only four states (Tamil Nadu excluded) in which two-thirds or more of households of agricultural labourers were effectively included, and 33 per cent or fewer were effectively excluded from the PDS. These states were Andhra Pradesh, Karnataka, Jammu and Kashmir and Tripura. The all-India average indicated that 52 per cent of agricultural labourers' households either had no card or an above-poverty-line card. The effective exclusion was 71 per cent in Bihar and 73 per cent in Uttar Pradesh.Can 70 per cent of agricultural workers' households be considered as ineligible for a basic food subsidy system like the PDS?We classify states where more than 50 per cent of households have either no card or an above-poverty-line card as states with an effectively high degree of exclusion from the PDS. We also classify those where more than 33 per cent of agricultural workers' households have an above-poverty-line or no card as states with a high exclusion of agricultural labour. There is a clear association between the exclusion of all households and those of agricultural labourers, that is, states with low overall levels of exclusion have low levels of exclusion of agricultural workers' households, and vice versa. There are only two states with low exclusion of agricultural labourers' households -- Andhra Pradesh and Karnataka -- and also with low overall exclusion. There are two exceptions, however: Tripura and Jammu and Kashmir.

Turning to the social background of households in India to illustrate, I have selected those states where the rural Scheduled Caste population is more than 10 per cent of the total population. In rural areas, there is known to be a substantial degree of overlap between Scheduled Caste status, landlessness and poverty. The National Sample Survey data show that less than 30 per cent of Scheduled Caste households received Antyodaya or below-poverty-line cards in Assam, Bihar, Himachal Pradesh, Jammu and Kashmir, Punjab, Rajasthan and Uttar Pradesh. In other words, 70 per cent or more of Scheduled Caste households either had an above-poverty-line card or no card in these states -- among them only Punjab is a state with a cereal-surplus. At the all-India level, 60 per cent of Scheduled Caste households in rural areas were effectively excluded from the PDS. States with a high degree of inclusion of Scheduled Castes were Andhra Pradesh, Karnataka and Kerala.

Finally, I turn to a classification of households on the basis of per capita household expenditure. Using the official poverty line (all-India level of 360 rupees per capita per month), all households with a monthly per capita expenditure less than Rs 365 are classsified as "poor" households. Note that the official Indian poverty line is actually a line of severe deprivation.20 We asked how many of the officially poor households had received a below-poverty-line or Antyodaya card? Let us consider five States -- Bihar, Orissa, Madhya Pradesh, Jharkhand and Chhatisgarh -- where more than 40 per cent of rural households belonged to this "poor" category. The majority of households officially deemed poor in four states, except Orissa, were without a below-poverty-line or Antyodaya card. The degree of such exclusion from the PDS was 77 per cent in Bihar, 67 per cent in Jharkhand, 54 per cent in Madhya Pradesh and 54 per cent in Chattisgarh; in Orissa, it was 44 per cent. In the heartland of India, targeting has come at a heavy cost -- a high exclusion of households living below the official poverty line.

Further, in 13 out of 27 States (Tamil Nadu excluded), the proportion of poor households without a below-poverty-line or Antyodaya card was higher than the proportion with a card. In striving for "efficiency" by means of narrow targeting, households that should be entitled to basic food security through the PDS are being left out. Analyzing data from the National Sample Survey makes it quite clear that a large proportion of agricultural labourers and other manual workers' households, those belonging to the Scheduled Castes and Tribes, households with little or no land, and those in the lowest expenditure classes, are excluded from the PDS today. The exceptions are Tamil Nadu, which is the only State to have a universal system of PDS, and the two southern States of Andhra Pradesh and Karnataka, where coverage of households under the below-poverty-line and Antyodaya categories is high.

Quantity: Turning to quantities purchased from the PDS, we cannot compare purchases by below-poverty-line card households with those by above-poverty-line card households, since the latter are unlikely to be regular users of the PDS at current prices. I therefore focus on below-poverty-line and Antyodaya card households to assess the extent to which PDS contributed to household consumption, using the data from the National Sample Survey's 61st round.

Even with the deterioration in the system of rationing, the monthly consumption of grain (rice and wheat) purchased from the PDS was greater than the consumption from other sources for below-poverty-line and Antyodaya card households in seven States, namely, Himachal Pradesh, Jammu and Kashmir, Karnataka, Maharashtra, Sikkim, Tamil Nadu and Tripura (see table). Grain purchased from the PDS contributed 20 kilograms or more to household consumption each month in Himachal Pradesh, Arunachal Pradesh, Jammu and Kashmir, Karnataka, Mizoram, Sikkim, Tamil Nadu, Tripura and Uttar Pradesh. Further, the PDS contributed 15 kg or more of grain to a household each month in 17 States. In short, below-poverty-line and Antyodaya households purchase significant quantities of food grain from the PDS. The extensive misclassification of needy households as above-poverty-line households is undoubtedly contributing to the nutritional insecurity of India's population.

Viability of fair-price shops: An important institutional concern is that of the economic viability of fair-price shops, which has been badly affected by the exclusion of the above-poverty-line population from the PDS. The virtual exclusion has led to a big decline in offtake. For example, total grain (rice and wheat) distributed through the PDS fell from 20.8 million tonnes in 1991 to 11.3 million tonnes in 2001. With fewer ration cards to serve, lower turnover and upper limits on the margins that can be charged to below-poverty-line consumers, the net profits of fair-price shop owners and dealers are lower under the Targeted PDS than before. Since there are economies of scale here, for instance, with respect to transport, the distribution of smaller quantities is likely to render many shops unprofitable. When fair-price shops are economically viable, there are fewer incentives to cheat.

Regional distribution of food grain: One of the objectives of the PDS has always been to ensure price stabilization in the country by transferring grain from cereals-surplus to cereals-deficit regions. Targeted PDS has not served this objective, because under the scheme the demand for cereals is no longer determined by state governments (based on their requirements and in practical terms on past utilization), but on allocations decided by the central government (based on poverty estimates prepared by the Planning Commission of India). The new system of allocation, as pointed out by the High-Level Committee on Long-Term Grain Policy,21 has led to imbalances between actual allocations and "allocations necessary to meet the difference between cereals production and requirement". The High-Level Committee was appointed to review the entire range of policies pertaining to management of the food grain economy, including minimum support price and price operations, issues related to the Food Corporation of India, the functioning of the PDS, allocation of grains to welfare programmes and policies of buffer stocking.

In a universal PDS, automatic stabilization of prices is ensured, as the demand for grain from fair-price shops increases at times when the gap between the PDS price and the market price rises. In the new system, however, with above-poverty-line quotas priced out of the PDS and below-poverty-line quotas low and fixed, the role of the PDS as an automatic stabilizer has been weakened.

Leakages: Undoubtedly, in many parts of India the current system of delivery has weaknesses resulting in leakages at different stages. As the Planning Commission points out,15 "The share of leakages in offtake from the central pool is abnormally high, except in the states of West Bengal and Tamil Nadu". It goes on to identify factors associated with relatively low leakages at the fair-price shop level and concludes that "general awareness of the beneficiaries, high literacy and strong grass roots-level organizations, particularly Panchayat Raj institutions (an elected village-governing committee), have helped states like West Bengal and Himachal Pradesh in reducing fair-price shop level leakage, and in the case of Tamil Nadu, has eliminated private retail outlets". Leakages cannot be lowered by further narrowing targeting. Reducing leakages requires political commitment and participation of the people in the delivery process.

Kerala: A people's movement for foodIt is well known that before liberalization, Kerala had one of the best run and most effective PDS networks in India. It is important to remember that the setting up of an effective PDS was the outcome of a strong people's movement for food. In Malabar and Travancore "the public distribution system was directly the consequence of mass action and government response to such action during the period of the food crisis".22 E. M. S. Namboodiripad, Communist leader and Kerala's first Chief Minister [the highest elected political office in a state], has described in an interview how the "kisan sabhas [farmer cooperatives], trade unions and other mass organizations insisted on procurement from landlords and distribution through ration shops", so there was tremendous public demand for rationing. Later, after 1957, the first Communist ministry took up the task of providing an effective system of delivery of food grain throughout the state. In 1964, during the food shortage, political demands led to a further expansion of the system of fair-price shops. Thus, political struggles were critical in establishing and strengthening the PDS in Kerala.The main features of the PDS in Kerala before the introduction of targeting were:

✦ Kerala has been the only state in India with a near-universal coverage of the PDS. All households that did not have landholdings sufficient to produce food grain for their own consumption were eligible for a ration card. In 1991, around 95 per cent of all households were covered by the PDS and possessed a ration card. 23✦ The monthly entitlement of food grain per adult was 13.8 kg in Kerala (or 460 grams per day), satisfying the minimum requirement of 370 grams of cereals per person per day recommended by the Indian Council of Medical Research.✦ The quantity of food grain purchased from the PDS has been higher than in most other states, making a significant contribution to household nutrition. In 1991, the annual offtake of food grain from the PDS averaged 69.6 kg per person in Kerala. The annual purchase of grain from the PDS provided about one half of the cereal requirements per person.✦ While the scheme was universal, there is evidence to show that the system was progressive and that the poor depended relatively more on the PDS than the rich.24, 25✦ The functioning of ration shops and of the delivery system has been better than in other parts of the country, and this is reflected in consumer surveys.Given the scale and effectiveness of the PDS, it has been noted that the system has contributed to an improvement in consumption and nutrition in Kerala.Targeting introduced as part of economic liberalization in the 1990s has undermined Kerala's PDS in several ways:✦ First, as 25 per cent of Kerala's population have been categorized as below-poverty-line by the Planning Commission, the guaranteed and subsidized allocation of grain for below-poverty-line households under the Targeted PDS accounts for only 10 per cent of the previous PDS supply. Given that Kerala is a food-deficit state, in the pre-TPDS period, home production accounted for 20 per cent of grain requirements, the PDS accounted for 32 per cent and the rest came from private trade. If the allocation to the above-poverty-line population is stopped, then the PDS allocation to Kerala will account, it is estimated, for 3.8 per cent of the grain requirements of the state.26 Thus, TPDS has changed in a big way the share of the PDS in the total grain requirements of Kerala. This has implications for domestic availability and prices.✦ Secondly, the Kerala Government has identified 42 per cent of households as below-poverty-line households (in contrast to the central government poverty ratio of 25 per cent) and is providing the below-poverty-line subsidy to these households from the state budget.✦ Thirdly, the Kerala Government has continued to provide additional grain to below-poverty-line households, as well as maintaining its entitlements for above-poverty-line households. There is a state subsidy on sales to above-poverty-line households.✦ Fourthly, offtake from the PDS has declined. As compared to an annual offtake of rice and wheat of around 2 million tonnes in 1991 and 1992, it was 1.6 million tonnes in 1999 and fell further to 0.71 million tonnes in 2000. There have been severe cuts in allocations for above-poverty-line households in 2006/07.✦ Finally, there is evidence that fair-price shops are becoming unprofitable and are closing down.27 Before TPDS was introduced, the average monthly sale of cereals was 7,500 kg of rice and 2,000 kg of wheat per fair-price shop. By 2001, these figures had fallen to 1,400 kg of rice and 200 kg of wheat, leading to losses. According to a Kerala Government estimate, the gross earnings per fair-price shop fell from Rs 3,711 before March 2000 to Rs 1,493 in August 2001, and the net income of the average fair price shop dealer became negative. Kerala was in a class of its own both in terms of participation in the PDS and the quantity of food grain distributed. It has suffered from the policy of narrow targeting introduced in 1996.

Tamil Nadu: A successful food distribution systemTamil Nadu stands out in sharp contrast, and is, in fact, unique among all states today for its near-universal PDS. There is an above-poverty-line or below-poverty-line classification of households in Tamil Nadu. There was a period when a policy of targeting was implemented, food coupons with income eligibility introduced, but that policy was withdrawn in response to public pressure, as people were excluded on a large scale because of the eligibility criteria. Also, the system was inconvenient and it became an important election issue. Today, with its near-universal PDS in practice, Tamil Nadu has introduced an option for households that do not want to purchase rice from the PDS and has given them scope for buying more sugar or kerosene. There are 100,000 cardholders who have exercised this option and another 52,000 who have withdrawn from the PDS completely. The remaining 17.8 million cardholders (despite having different types of cards) are all treated equally and can purchase rice at the same price -- Rs 2 per kg since June 2006. As Tamil Nadu is buying grain from the central government at higher prices (below-poverty-line allocation at the below-poverty-line price and above-poverty-line allocation at the above-poverty-line price), it is incurring an additional subsidy to maintain a universal system, with rice at a specially subsidized low price. The subsidy burden on the state was Rs 15 billion in 2006/07.

Another interesting feature of Tamil Nadu's distribution network is that there are no private fair-price shops. The cooperative sector runs 96 per cent of ration shops and the remaining are managed by panchayats and self-help groups. The District Central Cooperative Bank provides a cash credit facility to societies to purchase grain for the PDS. The Planning Commission has noted that leakages at the fair-price shops and distribution of ghost cards are low in Tamil Nadu. A detailed study of the PDS in the state identified strong political commitment and careful monitoring by the bureaucracy as elements of the PDS success.28

While nutritional outcomes cannot be directly attributed to the PDS alone, it is worth noting that Tamil Nadu has shown consistent improvement in nutritional outcomes over the last decade. National Family Health Survey data show that the proportion of underweight children (below three years old) fell from 46 per cent in 1992/93 to 37 per cent in 1998/99 and even further to 33 per cent in 2005/06 when the national average was 46 per cent. Similarly, malnutrition among women, as measured by the proportion with below normal body mass index, was 23.5 per cent in Tamil Nadu as compared to 33 per cent in the entire country in 2005/06. Tamil Nadu needs to be commended for managing a well-functioning universal system of delivery of cheap food in this era of liberalization.

Programmes for child nutritionMidday Meal Scheme: While the provision of midday meals or school meals had begun in some states earlier, it was made part of national policy in 1995. Termed the National Programme of Nutritional Support to Primary Education, it aimed to provide a cooked meal at school or 3 kg of food grain to each child, conditional on about 80 per cent attendance at school.29 In 2001, in response to a public interest litigation, the Supreme Court of India gave an order "to implement the midday meal scheme by providing every child in every government and government-assisted primary school with a prepared midday meal, with a minimum content of 300 calories and 8 to 12 grams of protein each school day for a minimum of 200 days". Implementation, of course, varies across India, and Tamil Nadu and Gujarat have been singled out as success stories.30 Reviewing the performance of this programme after the Supreme Court order, Reetika Khera notes that there has been a positive impact on school enrolment, particularly for girls. The impact on nutritional outcomes is more difficult to measure.Tamil Nadu was the pioneer of the national school meal programme. In 1982, the Chief Minister, M. G. Ramachandran, started a noon-meal scheme for children below the age of five. Over time, the programme has expanded to include pre-school infants, primary school children, children up to 15 years old in rural areas, old-age pensioners, the destitute, widows and from 1995 all pregnant women. All together, in 1999-2000, the noon meals reached 8.3 million persons in Tamil Nadu each day, 7.7 million of whom were children. While all children between the ages of 2 and 15 are eligible for a school lunch, the data suggest that participation is higher among relatively poorer children.31

The noon-meal scheme has had a long run in Tamil Nadu and achieved wide coverage. At the same time, various indicators of malnutrition show a downward trend in that state. To take one example, the incidence of severe malnutrition (Grades III and IV) among children aged up to 36 months declined from 12.3 per cent in 1983 to 0.3 per cent in 2000. It is not my intention to attribute the entire improvement in nutritional status of children in Tamil Nadu to its food and nutrition policies, but they must clearly be given due credit in any explanation.

Integrated Child Development Scheme: ICDS was first begun as a pilot scheme in 1975 and is the only national programme today that "provides a package of integrated services" to children below the age of six.32 The key services provided by ICDS, through its network of centres, or Anganwadis, are in the sphere of nutrition, health and pre-school education. In the last few years, there has been a well-articulated demand for "universalization of ICDS with quality". The Supreme Court has also intervened and directed the Government of India to universalize the programme.33 This demand for universalization would entail a functioning Anganwadi centre in every hamlet or settlement, extension of ICDS services to all children below the age of six, as well as eligible (pregnant and lactating) women, and improvements in the scope and quality of services.

As in the case of other welfare programmes, the implementation and impact of ICDS varies across India. There are differences in the scheme's content, as well as in its implementation. In some states, cooked food is provided, whereas in others it is a ready-to-eat snack.29 An evaluation conducted in 2000 showed that food supply was irregular in about 67 per cent of Anganwadis. The worst-affected states were in the northeastern region, while the better-off states were Himachal Pradesh, Maharashtra, Tamil Nadu and Goa.

Lessons for policyIn the past few years, India's role as a growing economic power has been recognized. However, India still surpasses other developing nations in the absolute number of persons suffering from chronic hunger and malnutrition. Policymaking and implementation have failed to solve this crisis of mass under-nutrition.

In the mid-1960s, a coherent set of policies, dealing with production, storage and distribution, were introduced to address the problem of food insecurity. These policies did have some success, especially in respect of accelerating the production of food grain and ensuring a period of low and stable prices for cereals. In the period of economic liberalization, starting in 1991, policies to address food security have been weakened and have had a very damaging impact on consumption and nutrition. Today, given the high rate of inflation, the situation is even more critical.

The period of economic liberalization has seen a severe setback to some of our major programmes of food security. Three key objectives of economic reforms -- and these are stated explicitly in many policy documents, including the annual official Economic Surveys -- have been to reduce food subsidies, leave food distribution to the market and undermine food policy intervention and subsidies to the "poorest of the poor". While addressing the National Development Council in December 2007, Prime Minister Manmohan Singh said that the government had to "ensure that subsidized food grains are targeted at only the needy and the poor".34 As a matter of fact, the absolute and relative size of the food subsidy -- not all of which, of course, benefits consumers -- has declined steadily. During 2002/07, the Indian Government's food subsidy bill shrunk in absolute nominal and real terms. As a share of gross domestic product food subsidies fell from 0.99 per cent in 2002/03 to 0.6 per cent in 2006/07.

One of the major instruments of food policy in India has been the public distribution system. An important lesson from the experience of the last decade is that the policy of narrow targeting, introduced as part of liberalization, has not succeeded to feed the chronically hungry. I have shown in this paper that on account of a drive for "efficiency" by means of narrow targeting, households that should be entitled to basic food security have been left out of the PDS. Data from the National Sample Survey, conducted in 2004/05, make it quite clear that a large proportion of agricultural labourers and other manual workers' households, households belonging to Scheduled Castes and Tribes, households with little or no land, as well as households in the lowest income classes, are excluded from the PDS today. Thus, the Targeted PDS has led to the widespread exclusion of genuinely needy persons from the public distribution system. It has adversely affected the functioning and economic viability of the PDS network and has led to a deficiency in the delivery system. It has failed to achieve the objective of price stabilization through the transfer of cereals from surplus to deficit regions of India.

Supplementary programmes of nutrition, particularly for infants and schoolchildren, have expanded in the last few years, in response to pressure from below, as well as pressure from above (the judiciary is a particular example). There is now a strong demand for the "universalization of icds with quality" and for ensuring a healthy cooked school meal for all children.

It is clear that a task of utmost importance today is to guarantee adequate access to food to ensure food security and end endemic hunger. A well-functioning universal public distribution system can be the means to ensure adequate physical access to food at the local and household levels. These proposals -- for a universal public distribution system, the universalization of the Integrated Child Development Scheme with quality, and a midday meal for all primary and secondary schoolchildren -- are likely to require higher food subsidies. In the choice between fiscal restraint and basic food security, if the former is chosen, the result will be a very high welfare cost to the majority of people in India in this and the next generation.

Notes

1 See www.unicef.org/progressforchildren/2007n62 See www.fao.org/docrep/009/a0750e/a0750e00.HTM3 There have been three rounds of the National Family Health Survey: NFHS-1 conducted in 1992-1993, NFHS-2 in 1998-1999 and NFHS-3 in 2005-2006 (see www.nfshindia.org).4 Srinivas, A., 2008, "Starvation threat looms as food, fuel prices shoot up", Businessline, July 14 (based on a National Sample Survey Organisation paper by K. Thomas).5 There is also a scheme called Annapurna that provides free food grain for the aged poor (see Medrano, 2004).6 Government of India, 2008, Ministry of Finance, Economic Survey 2007-08 (http://indiabudget.nic.in).7 Dreze, J and Amartya Sen, 1989, Hunger and Public Action, Oxford: Clarendon Press.8 Dreze, J and Amartya Sen, 1989, The Political Economy of Hunger, Vol. 1; 1990, The Political Economy of Hunger, Vol. 2; 1991, The Political Economy of Hunger, Vol. 3, Oxford: Clarendon Press.9 Sen, Amartya K, 1981, Poverty and Famines, Oxford: Clarendon Press.10 Bapna, S. L., 1990, "Food, Security through the PDS: The Indian Experience", in D. S. Tyagi and V. S. Vyas (eds.) Increasing Access to Food: The Asian Experience. New Delhi: Sage Publications.11 Swaminathan, Madhura, 2000, Weakening Welfare: The Public Distribution of Food in India, New Delhi: LeftWord Books.12 World Bank, 1996. "India's Public Distribution System: A National and International Perspective", Poverty and Social Policy Department, November (Reprinted as Radhakrishna, R. and Subbarao, K. 1997, World Bank Discussion Paper No. 380).13 Government of India, 1997, Focus on the Poor, Ministry of Civil Supplies, Consumer Affairs and Public Distribution, New Delhi.14 The economic cost is the total cost borne by the Food Corporation of India and is the sum of procurement costs (including the price paid to farmers) and distribution costs (including for storage and transportation).15 Planning Commission, Planning and Evaluation Organization, 2005, Performance Evaluation of Targeted Public Distribution System, March, New Delhi.16 Cornia, G. A. and F. Stewart, 1993, "Two Errors of Targeting", Journal of International Development, Vol. 5, No. 5, pp 459-490.17 Government of India, 2007, Ministry of Statistics and Programme Implementation, NSSO, Public Distribution System and Other Sources of Household Consumption 2004-05, Volume I, National Sample Survey 61st Round, July.18 MSSRF (M. S. Swaminathan Research Foundation) and World Food Programme, 2001, Food Insecurity Atlas of Rural India, Chennai.19 The National Sample Survey defines five types of rural households based on information on sources of income: self-employed (agriculture), self-employed (non agriculture), agricultural labour, other labour and other households.20 Saith, A., 2005, "Of Calories and Things: Reflections on Nutritional Norms, Poverty Lines and Consumption Behaviour in India", Economic and Political Weekly, Vol. 40, No. 43, October 22-28, pp 4611-4618.21 Government of India, 2002, Final Report of the High-Level Committee on Long-Term Grain Policy, New Delhi, July (Chaired by Abhijit Sen).22 Ramachandran, V. K., 1996, "Kerala's Development Achievements: A Review", in J. Dreze and Amartya Sen (eds.), Indian Development: Selected Regional Perspectives, Oxford University Press.23 Kannan, K. P., 1995, "Declining Incidence of Rural Poverty in Kerala", Economic and Political Weekly, 30, 41 and 42, October 14-21, pp.2651-2662.24 George, P. S., 1979, Public Distribution of Food grains in Kerala, Income Distribution Implications and Effectiveness, IFPRI, Research Report 7, March.25 Koshy, A., A. A. Gopalakrishnan, V. Vijayachandran and N. K. Jayakumar, 1989, Report of the Study on Evaluation of the Public Distribution System in Kerala, Centre for Management Development, Trivandrum.26 Suryarayana, M.H., 2001, "Economic Reform versus Food Security: Kerala's Gordian Knot", Journal of International Development, 13 (2), pp 239-253.27 Krishnakumar, R., 2000, "PDS: A System in Peril", Frontline, vol. 17, no 19, Sept 16-29.28 Venkatasubramanian, A. K., 2006, "The Political Economy of the Public Distribution System in Tamil Nadu", in Vikram K. Chand (ed.) Reinventing Public Service Delivery in India, New Delhi: Sage Publications.29 Medrano, P., 2004, "The Experience with Food Safety Nets in India", M. S. Swaminathan, Pedro Medrano, Daniel J. Gustafson and Pravesh Sharma (eds.), National Food Security Summit 2004, Selected Papers, New Delhi: World Food Programme.30 Khera, Reetika, 2006, "Mid-day Meals in Primary Schools", Economic and Political Weekly, Nov. 18, pp 4742-4750.31 Rajivan, Anuradha K., 2001, "Nutrition Security in Tamil Nadu", in S. Mahendra Dev, P. Antony, V. Gayathri and R. P. Mamgain (eds.) Social and Economic Security in India, New Delhi: Institute for Human Development.32 Citizen's Initiative for the Rights of Children under Six, 2006, Focus on Children Under Six, Abridged Report, December, New Delhi.33 A working group of the Planning Commission has also made the same recommendation (see Draft Report of the Third Sub-Group, Working Group on Food and Nutrition Security, October 2006).34 Prime Minister Manmohan Singh's speech is available at www.nerve.in/news:2535000119124 * According to Census of India's figures, India's population as of December 2003 is 1.02 billion -- Ed.

About the Author

Madhura Swaminathan is Professor at the Indian Statistical Institute, Kolkata. She was a member of the Government of India's High-Level Committee on Long-Term Grain Policy.